Is Investing in Yourself Really The Best Investment You Can Make?

The mantra goes something like this. Investing in yourself is worthwhile, see, because it inevitably leads to more money, greater career prospects, and better investing skillz. Charlie Munger said so, therefore it’s gotta be true.

There are many different ways someone can invest in themselves. The most popular is probably taking a course. There are essentially two ways to go this. You can either go back for formal education or learn something for far less money. Coursera and other online-only educators have courses on damn near everything, starting at the low price of $0.

There are other ways to invest in yourself, too. I’m a big fan of books, especially business biographies. I’ve learned something from just about every book I’ve read, although not all of those lessons have directly translated into profit. Hell, you can even argue going out and meeting new people is important, since connections will help you get ahead.

Self-help is a huge industry today, and will continue to be in the future. We collectively have a lot of disposable income and the desire to improve ourselves.

But has the whole concept gone too far? Maybe it has.

The dark side of investing in yourself

I’ve said it before and I’ve said it again. Having a book collection is just intellectual masturbation from people who are trying to look smart. My favorite person to make fun of is one who buys five books for every one they read.

I’ve gotten much smarter about buying books, choosing to use alternative methods 99% of the time. The only reason why I browse bookstores is to take pictures of books I’ll just get from the library later. No, this hasn’t gotten me kicked out of every book store in the country, although I did get the stink eye once. Actually, probably more than once. I’m not very self-aware.

We criticize people when they waste money on credit card debt or having too much car, but I’ve yet to hear someone say a book collection is stupid. It’s because books are an investment, silly.

There are a million other examples. Spend $500 on office clothes? Turns out it’s not a waste of money. It’s an investment in my career, stupid.

Gym membership that never gets used? Again, not a waste. It’s an investment in my rockin’ bod. Ignore the muffin top, please.

We’ve gotten to the point where half of our purchases are justified because they can, in theory at least, lead to some sort of long-term improvement in our lives. Yet we keep on struggling, not really getting ahead. Results? We don’t need no stinking results.

How to measure it

There are two parts to an investment. There’s the original principal, and then the return. When you’re investing capital passively, it’s easy to measure the rate of return. You made 5% or 10% or whatever.

It’s a lot harder to measure investing in yourself. Say you’re a blooger like me, and you invest in some marketing courses. You spend $1,000 and create an additional $250 per month in income. That’s a great return, right?

Well, maybe not. What if you have to work an additional 10 hours per month to create that $250 extra income? That’s still decent–especially if you don’t make $25 per hour in your day job–but it makes things murkier.

And then there’s the original investment in the first place. Was the $1,000 worth it when the same information might exist somewhere else for free?

This is what self-help gurus count on. Nobody wants to admit they pissed away money on a book, course, or even a gym membership. So they tell themselves it was worth it. Collectively, we do a terrible job of measuring if such expenditures are offering a decent return on investment. I don’t think that changes soon, either.

Should you do it?

If you do it right, investing in yourself can be some of the best dollars you’ll ever spend.

A few days ago, I used the example of someone who spends $30,000 on an education that pays them $20,000 more a year for life. That’s a great investment, even after calculating the time involved and any interest on the loan.

But most of the time measuring returns aren’t quite that easy, especially for people who are spending the cash on personal growth. Often, someone will read the required book or take the course and then abandon the subject completely. Or they’ll read it, shrug, and move on with life.

I’m not saying you shouldn’t spend money on this stuff. Just take a long, hard look at it before forking out your dollars.